Boulder County Commissioners v. Suncor Energy

Appellate Case: 19-1330 Document: 010110642555 Date Filed: 02/08/2022 Page: 1
FILED
PUBLISH United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
February 8, 2022
FOR THE TENTH CIRCUIT
Christopher M. Wolpert
_________________________________ Clerk of Court
BOARD OF COUNTY
COMMISSIONERS OF BOULDER
COUNTY; BOARD OF COUNTY
COMMISSIONERS OF SAN MIGUEL
COUNTY; CITY OF BOULDER,
Plaintiffs - Appellees,
v. No. 19-1330
SUNCOR ENERGY (U.S.A.) INC.;
SUNCOR ENERGY SALES INC.;
SUNCOR ENERGY INC.; EXXON
MOBIL CORPORATION,
Defendants - Appellants.
------------------------------
CHAMBER OF COMMERCE OF THE
UNITED STATES OF AMERICA;
COLORADO COMMUNITIES FOR
CLIMATE ACTION; THE NATIONAL
LEAGUE OF CITIES; THE U.S.
CONFERENCE OF MAYORS; THE
INTERNATIONAL MUNICIPAL
LAWYERS ASSOCIATION; NATURAL
RESOURCES DEFENSE COUNCIL;
PUBLIC CITIZEN, INC.,
Amici Curiae.
_________________________________
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:18-CV-01672-WJM-SKC)
_________________________________
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Kannon K. Shanmugam, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington,
D.C. (William T. Marks, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington,
D.C.; Theodore V. Wells, Jr., Daniel J. Toal, Jaren Janghorbani, Paul, Weiss, Rifkind,
Wharton & Garrison LLP, New York, New York; Colin G. Harris, Faegre Baker Daniels
LLP, Boulder, Colorado; and Hugh Quan Gottschalk, Evan B. Stephenson, Wheeler
Trigg O’Donnell LLP, Denver, Colorado, with him on the briefs), for Defendants –
Appellants.
Richard Herz, EarthRights International, Washington, D.C. (Marco Simons, Sean
Powers, Michelle Harrison, EarthRights International, Washington, D.C.; David G.
Bookbinder, Niskanen Center, Washington, D.C.; and Kevin S. Hannon, The Hannon
Law Firm, Denver, Colorado, with him on the brief), for Plaintiff – Appellee.
Peter D. Keisler, C. Frederick Beckner III, and Ryan C. Morris, Sidley Austin LLP,
Washington, D.C., filed an amicus brief on behalf of Chamber of Commerce of the
United States of America.
W. Eric Pilsk, Sarah M. Keane, Sara V. Mogharabi, and Samantha R. Caravello, Kaplan
Kirsch & Rockwell LLP, Denver, Colorado, filed an amicus brief on behalf of Colorado
Communities for Climate Action.
Robert S. Peck, Center for Constitutional Litigation, P.C., Washington, D.C., filed an
amicus brief on behalf of the National League of Cities, the United States Conference of
Mayors, and the International Municipal Lawyers Association.
Peter Huffman, Natural Resources Defense Council, Washington, D.C., filed an amicus
brief on behalf of the Natural Resources Defense Council.
Scott L. Nelson and Allison M. Zieve, Public Citizen Litigation Group, Washington,
D.C., filed an amicus brief on behalf of Public Citizen.
_________________________________
Before HOLMES, LUCERO, and McHUGH, Circuit Judges.
_________________________________
McHUGH, Circuit Judge.
_________________________________
This matter is before us on remand from the United States Supreme Court. Suncor
Energy (U.S.A.) Inc. v. Bd. of Cnty. Comm’rs of Boulder Cnty., 141 S. Ct. 2667 (2021)
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(Mem.). The case originally came to us as an appeal of the district court’s order
remanding the action to state court. Pursuant to 28 U.S.C. § 1447(d), orders remanding
removed cases to state court are not appealable “except that an order remanding a case to
the State court from which it was removed pursuant to section 1442 [federal officer
removal] or 1443 [civil rights cases] of this title shall be reviewable by appeal or
otherwise.” In our prior decision, we held § 1447(d) limited our appellate jurisdiction to
review of only the federal officer basis for removal, which was one of six grounds of
federal subject-matter jurisdiction advanced in support of removal on appeal. Bd. of Cnty.
Comm’rs of Boulder Cnty. v. Suncor Energy (U.S.A.) Inc., 965 F.3d 792, 819 (10th Cir.
2020), vacated and remanded by 141 S. Ct. 2667 (2021) (Mem.).
In BP P.L.C. v. Mayor & City Council of Baltimore, the Supreme Court rejected
that position, holding that when a removal action is appealed under the limited grounds
listed in 28 U.S.C. § 1447(d), the appellate court has subject-matter jurisdiction over all
grounds for removal addressed in the district court’s order. 141 S. Ct. 1532, 1543 (2021).
The Court then granted certiorari in this case, vacated our prior decision, and remanded
for further consideration in light of its decision in BP v. Mayor & City Council of
Baltimore. Suncor Energy (U.S.A.) Inc. v. Bd. of Cnty. Comm’rs of Boulder Cnty., 141 S.
Ct. 2667 (2021) (Mem.).
We undertake that further consideration now. For the following reasons, we hold
that none of the six grounds asserted support federal removal jurisdiction. Accordingly,
we affirm the district court’s order remanding the action to state court.
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BACKGROUND
Factual History
The Energy Companies and Climate Change1
Stated broadly, this is a lawsuit about damages related to climate change. The
Board of County Commissioners of Boulder County, the Board of County
Commissioners of San Miguel County, and the City of Boulder (collectively, the
“Municipalities”) say they have experienced and will continue to experience harm
because of climate change caused by fossil-fuel consumption and rising levels of carbon
dioxide in the atmosphere. They also allege they have spent and will continue spending
millions of dollars to mitigate this harm.
The Municipalities contend that Suncor Energy (U.S.A.) Inc., Suncor Energy
Sales, Inc., Suncor Energy, Inc., and ExxonMobil Corporation (“Exxon”) (collectively,
the “Energy Companies”) have contributed significantly to the changing climate in
Colorado by producing, marketing, and selling fossil fuels. And the Municipalities allege
the Energy Companies have continued their fossil-fuel activities even though they knew
these activities would change the climate dramatically. The Municipalities further allege
the Energy Companies concealed and/or misrepresented the dangers associated with the
burning of fossil fuels despite having been aware of those dangers for decades.
1
When courts review a notice of removal for jurisdiction, they may consider the
complaint as well as documents attached to the notice of removal. See McPhail v. Deere
& Co., 529 F.3d 947, 955–56 (10th Cir. 2008). Thus, we take these facts from the
Amended Complaint and the other documents attached to the Notice of Appeal.
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Exxon’s Outer Continental Shelf Leases
On appeal, the Energy Companies contend there is federal jurisdiction over the
Municipalities’ claims, in part, because Exxon and/or its affiliated companies have leased
and continue to lease portions of the outer continental shelf of the United States (“OCS”)
pursuant to the Outer Continental Shelf Lands Act (“OCSLA”) to extract fossil fuels.
Accordingly, we include relevant background information about the OCS leases.
The OCS “is a vast underwater expanse” that begins several miles off the coastline
and extends seaward for roughly two hundred miles. Ctr. for Sustainable Econ. v. Jewell,
779 F.3d 588, 592 (D.C. Cir. 2015). The “subsoil and seabed” of the OCS “appertain to
the United States and are subject to its jurisdiction and control.” 43 U.S.C. § 1331(a).
“Billions of barrels of oil and trillions of cubic feet of natural gas lie beneath the OCS.”
Jewell, 779 F.3d at 592.
Pursuant to the OCSLA, the Department of Interior (“DOI”) administers a federal
leasing program to develop and make use of the OCS’s oil and gas resources. See 43
U.S.C. §§ 1334–1356b. The Interior Secretary “is authorized to grant to the highest
responsible qualified bidder or bidders by competitive bidding . . . any oil and gas lease”
on these submerged lands. 43 U.S.C. § 1337(a)(1). For decades, Exxon has participated
in this competitive leasing program, and it continues to conduct operations under OCS
leases.
By the terms of its OCS leases, Exxon is required to conduct drilling “in
accordance with” federally approved exploration, development, and production plans and
conditions. App. at 64 § 9. These plans must “conform to sound conservation practices to
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preserve, protect, and develop minerals resources and maximize the ultimate recovery of
hydrocarbons from the leased area.” Id. § 10. Exxon is obligated to “exercise diligence in
the development of the leased area and in the production of wells located thereon;”
“prevent unnecessary damage to, loss of, or waste of leased resources;” and “comply with
all applicable laws, regulations and orders related to diligence, sound conservation
practices and prevention of waste.” Id. Earlier OCS leases further provided, “[a]fter due
notice in writing, the Lessee shall drill such wells and produce at such rates as the Lessor
may require in order that the leased area or any part thereof may be properly and timely
developed and produced in accordance with sound operating principles.” Id. at 50 § 10.
That provision is not included in the current leases.
The leases provide DOI officials reserve the right to obtain “prompt access” to
facilities and records of private OCS lessees for the purpose of federal safety, health, or
environmental inspections. Id. at 64 § 12. The government reserves a right of first refusal
to purchase all materials “[i]n time of war or when the President of the United States shall
so prescribe.” Id. at 68 § 15(d). The government also requires that 20% of all crude or
natural gas produced pursuant to drilling leases be offered “to small or independent
refiners.” Id. § 15(c).
Procedural History
The Claims
In this action, the Municipalities sue for damages allegedly caused by climate
change. They assert a variety of claims under Colorado law, both common law and
statutory, against the Energy Companies. Specifically, the Municipalities allege claims of
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public nuisance; private nuisance; trespass; unjust enrichment; violation of the Colorado
Consumer Protection Act, Colo. Rev. Stat. § 6-1-105(1), et seq.; and civil conspiracy.
They do not allege any federal claims.
The Municipalities seek compensatory damages, remediation and/or abatement,
treble damages, and costs and attorney fees. The Municipalities also ask that the Energy
Companies be held jointly liable under Colorado Revised Statutes § 13-21-111.5(4) for
“consciously conspir[ing] and deliberately pursu[ing] a common plan to commit tortious
acts.” Id. at 194–95 The Municipalities expressly do not seek to interfere with or impose
liability based on the Energy Companies’ speech; to “enjoin any oil and gas operations or
sales in the State of Colorado, or elsewhere, or to enforce emissions controls of any
kind;” to recover “damages or abatement relief for injuries to or occurring on federal
lands;” or to impose liability based on any act potentially deemed lobbying or petitioning.
Id. at 193. That is, the Municipalities do not ask the court “to stop or regulate” fossil-fuel
production or emissions “in Colorado or elsewhere.” Id. at 74. They instead request that
the Energy Companies “help remediate the harm caused by their intentional, reckless and
negligent conduct, specifically by paying their share of the costs [the Municipalities]
have incurred and will incur because of [the Energy Companies’] contribution to
alteration of the climate.” Id.
The Notice of Removal and the District Court’s Remand Order
After the Municipalities filed their Amended Complaint in Colorado state court,
the Energy Companies filed a Notice of Removal in the United States District Court for
the District of Colorado. In that Notice, they asserted seven grounds for removal. Five of
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those grounds were under the general removal statute, 28 U.S.C. § 1441(a), allowing for
removal of “any civil action brought in a State court of which the district courts of the
United States have original jurisdiction.” Specifically, the Energy Companies contended
that 28 U.S.C. § 1331 conferred original jurisdiction over the claims because (1) the
Municipalities’ claims arose only under federal common law; (2) the Clean Air Act
(“CAA”) completely preempted the state-law claims; (3) the claims implicated disputed
and substantial “federal issues” under Grable & Sons Metal Products, Inc. v. Darue
Engineering & Manufacturing, 545 U.S. 308 (2005); (4) the claims arose from incidents
that occurred in federal enclaves within the Municipalities’ borders; and (5) original
federal jurisdiction exists under the OCSLA. In addition, the Energy Companies asserted
original federal jurisdiction was available under (6) the federal officer removal statute, 28
U.S.C. § 1442(a), and (7) the bankruptcy removal statute, 28 U.S.C. § 1452(a).
The Municipalities timely filed a Motion to Remand pursuant to 28 U.S.C.
§ 1447(c). In a detailed opinion, the district court rejected all asserted grounds for
removal and remanded the action to state court.
The Appeal
The Energy Companies appealed the district court’s remand order on six grounds,
including the federal officer removal statute, 28 U.S.C. § 1442, pursuant to 28 U.S.C.
§ 1447(d). They argued that appealing the remand order under the federal officer removal
statute gave this court jurisdiction to consider all the grounds for removal asserted, not
just federal officer removal. On plenary review, we disagreed and held that our
jurisdiction was limited to the federal officer removal question. Suncor Energy, 965 F.3d
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at 819. Concluding that the requirements for federal officer removal had not been
satisfied, we affirmed the district court’s remand order without considering the other
grounds for removal. Id. at 827.
The Supreme Court has now clarified that in circumstances such as the present,
where federal officer removal is one of multiple grounds for removal, the entire order of
remand is reviewable on appeal. BP v. Mayor & City Council of Balt., 141 S. Ct. at 1543.
Thus, our jurisdiction extends beyond the federal officer removal statute to all grounds
advanced for federal jurisdiction over the action. The Court vacated our opinion and
remanded to us for reconsideration. See Suncor Energy, 141 S. Ct. at 2667.
On remand from the Supreme Court, we requested supplemental briefing from the
parties. The Municipalities seek affirmance of the district court’s decision remanding the
action to Colorado state court, and the Energy Companies again claim removal is proper.
DISCUSSION
On appeal, the Energy Companies challenge the district court’s remand order,
relying on six grounds for federal jurisdiction under § 1442, the federal officer removal
statute, and § 1441, the general removal statute. Under § 1442, the Energy Companies
contend Exxon acted under a federal officer, which establishes (1) federal officer
removal. And under § 1441, they contend there is original federal jurisdiction over the
Municipalities’ claims because (2) the claims arise under federal common law; (3) the
CAA completely preempts the Municipalities’ state-law claims; (4) the claims necessarily
raise substantial federal issues; (5) there is federal enclave jurisdiction; and (6) the
OCSLA establishes original federal jurisdiction over these claims.
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We begin our analysis with a discussion of the relevant standard of review. Then,
we discuss the merits of each proposed basis of federal subject-matter jurisdiction.
Ultimately, we conclude the district court correctly rejected each ground, and we affirm
the district court’s remand order.
Standard of Review
“Only state-court actions that originally could have been filed in federal court may
be removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386,
392 (1987). “‘Federal courts are courts of limited jurisdiction.’” Gunn v. Minton, 568
U.S. 251, 256 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,
377 (1994)). So “there is a presumption against our jurisdiction.” Merida Delgado v.
Gonzales, 428 F.3d 916, 919 (10th Cir. 2005) (quotation marks omitted).
The presumption against jurisdiction is manifested in “the deeply felt and
traditional reluctance of th[e Supreme] Court to expand the jurisdiction of the federal
courts through a broad reading of jurisdictional statutes.” Romero v. Int’l Terminal
Operating Co., 358 U.S. 354, 379 (1959), superseded on other grounds by statute, The
Jones Act, 45 U.S.C. § 59, as recognized in Miles v. Apex Marine Corp., 498 U.S. 19(1990). Thus, “statutes conferring jurisdiction on federal courts are to be strictly
construed, and doubts resolved against federal jurisdiction.” United States ex rel. King v.
Hillcrest Health Ctr., Inc., 264 F.3d 1271, 1280 (10th Cir. 2001) (quotation marks
omitted). The Energy Companies, as the parties removing to federal court, bear the
burden of establishing jurisdiction by a preponderance of the evidence. Dutcher v.
Matheson, 733 F.3d 980, 985 (10th Cir. 2013).
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“We review the district court's ruling on the propriety of removal de novo.”
Frederick v. Hartford Underwriters Ins. Co., 683 F.3d 1242, 1245 (10th Cir. 2012). We
also apply de novo review to questions of federal subject-matter jurisdiction. Navajo
Nation v. Dalley, 896 F.3d 1196, 1203 (10th Cir. 2018).
Grounds Asserted for Federal Jurisdiction
In our prior decision, we rejected the Energy Companies’ reliance on § 1442, the
federal officer removal statute. Suncor Energy, 965 F.3d at 819–27. Because the Supreme
Court vacated our prior decision, we again consider that issue here. Then, we address
each of the other grounds advanced for federal subject-matter jurisdiction, including a
discussion of the district court’s ruling on each issue.
28 U.S.C. § 1442(a): Federal Officer Removal Jurisdiction
The Energy Companies argue there is federal jurisdiction and this action is
removable because Exxon acted under a federal officer pursuant to its OCS leases.2 The
district court held that any control exercised by federal officers over Exxon’s operations
through the issuance of government leases to develop fossil fuels on the OCS was
insufficient to trigger federal jurisdiction under § 1442. We agree.
The federal officer removal statute permits removal of a state court civil action
“that is against or directed to . . . any officer (or any person acting under that officer) of
2
Exxon is the only party that allegedly acted under a federal officer. Section 1442,
however, allows for independent removal of an entire case by “only one of several named
defendants.” Akin v. Ashland Chem. Co., 156 F.3d 1030, 1034 (10th Cir. 1998). Thus, if
Exxon can show it acted under a federal officer such that this case is removable under
§ 1442, the entire case is removable.
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the United States or of any agency thereof . . . for or relating to any act under color of
such office.” 28 U.S.C. § 1442(a)(1). The statute’s “‘basic purpose’ is to protect against
the interference with federal operations that would ensue if a state were able to arrest
federal officers and agents acting within the scope of their authority and bring them to
trial in a state court for an alleged state-law offense.” Mayor & City Council of Balt. v.
BP P.L.C. (Baltimore II), 952 F.3d 452, 461 (4th Cir. 2020) (quoting Watson v. Phillip
Morris Cos., Inc., 551 U.S. 142, 150 (2007)), vacated and remanded on other grounds by
141 S. Ct. 1532 (2021).3 Unlike other removal statutes, it should “be liberally construed
to give full effect to th[at] purpose[].” Colorado v. Symes, 286 U.S. 510, 517 (1932).
Section 1442(a)(1) removal can apply to private persons “who lawfully assist”
federal officers “in the performance of [their] official dut[ies],” Davis v. South Carolina,
107 U.S. 597, 600 (1883), meaning the private person must be “‘authorized to act with or
for [federal officers or agents] in affirmatively executing duties under . . . federal law,’”
Watson, 551 U.S. at 151 (alterations in original) (quoting City of Greenwood v. Peacock,
384 U.S. 808, 824 (1966)). And § 1442(a)(1) also allows removal by private
corporations. Isaacson v. Dow Chem. Co., 517 F.3d 129, 135–36 (2d Cir. 2008). In either
case, private defendants may remove under § 1442(a)(1) if they can show (1) they acted
under the direction of a federal officer, (2) the claim has a connection or association with
3
This is the appellate court’s decision reviewing Mayor & City Council of Balt. v.
BP, P.L.C. (Baltimore I), 388 F. Supp. 3d 538, 565 (D. Md. 2019), aff’d in part by 952
F.3d 452 (4th Cir. 2020), which we cite later in this opinion. Because other cases we cite
also name BP P.L.C. as a party, we distinguish these two cases by referring to the district
court’s opinion as Baltimore I and the appellate court’s opinion as Baltimore II.
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government-directed conduct, and (3) they have a colorable federal defense to the claim
or claims. 28 U.S.C. § 1442(a)(1); Latiolais v. Huntington Ingalls, Inc., 951 F.3d 286,
296 (5th Cir. 2020); Sawyer v. Foster Wheeler LLC, 860 F.3d 249, 254 (4th Cir. 2017);
see also Greene v. Citigroup, Inc., No. 99-1030, 2000 WL 647190, at *2 (10th Cir. May
19, 2000) (unpublished) (applying a similar three-part test for federal officer removal
jurisdiction). Exxon has failed to establish the first element of federal officer removal
jurisdiction.
“The statutory phrase ‘acting under’ describes ‘the triggering relationship between
a private entity and a federal officer.’” Baltimore II, 952 F.3d at 462 (quoting Watson,
551 U.S. at 149). “The words ‘acting under’ are broad,” but “not limitless.” Watson, 551
U.S. at 147. In this context, “under” describes a relationship between private entity and
federal superior typically involving “‘subjection, guidance, or control.’” Id. at 151(quoting WEBSTER’S NEW INTERNATIONAL DICTIONARY 2765 (2d ed. 1953)). Thus, a
“private person’s ‘acting under’ must involve an effort to assist, or to help carry out, the
duties or tasks of the federal superior.” Id. at 152. This “help or assistance necessary to
bring a private person within the scope of the statute does not include simply complying
with the law[] . . . , even if the regulation is highly detailed and even if the private firm’s
activities are highly supervised and monitored.” Id. at 152–53. Rather, “there must exist a
‘special relationship’ between” the private firm and the federal superior. Isaacson, 517
F.3d at 137 (quoting Watson, 551 U.S. at 157).
In Watson, “the Court considered whether the Philip Morris Companies were
‘acting under’ a federal officer or agency when they tested and advertised their cigarettes
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in compliance with the Federal Trade Commission’s [(“FTC”)] detailed regulations.” Id.
at 136. The defendants highlighted various lower court cases holding that government
contractors could invoke § 1442 removal “at least when the relationship between the
contractor and the [g]overnment is an unusually close one involving detailed regulation,
monitoring, or supervision.” Watson, 551 U.S. at 153. The Court unanimously rejected
this attempt to equate the sufficiency of “close supervision” over private contractors to
“intense regulation” of firms who are not operating under a governmental contract. Id.The Court explained, “the private contractor [that is subject to sufficiently close
supervision] is helping the [g]overnment to produce an item that it needs,” unlike Phillip
Morris, which was simply conducting its operations in compliance with federal law. Id.In other words, “[t]he assistance that private contractors provide federal officers goes
beyond simple compliance with the law and helps officers fulfill other basic
governmental tasks.” Id.In Watson, the Court illustrated a sufficient special relationship with the facts in
Winters v. Diamond Shamrock Chemical Co., 149 F.3d 387 (5th Cir. 1998), overruled on
other grounds by Latiolais, 951 F.3d at 296. Id. at 153–54. Winters involved tort claims
against Dow Chemical premised on the production of Agent Orange under a Department
of Defense contract for use in the Vietnam War. 149 F.3d at 398. The Fifth Circuit
determined that Dow satisfied the “acting under” element for federal officer removal
based on “the government’s detailed specifications concerning the make-up, packaging,
and delivery of Agent Orange, the compulsion to provide the product to the government’s
specifications, and the on-going supervision the government exercised over the
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formulation, packaging, and delivery of Agent Orange.” Id. at 400. Dow “provid[ed] the
[g]overnment with a product that it used to help conduct a war,” and “at least arguably,
. . . performed a job that, in the absence of a contract with a private firm, the
[g]overnment itself would have had to perform.” Watson, 551 U.S. at 154. As such, it had
a “special relationship” with the government whereby it “help[ed] carry out[] the duties
or tasks of the federal superior.” Id. at 152, 157 (emphasis omitted); see also Isaacson,
517 F.3d at 137 (holding the “acting under” prong satisfied because Dow “received
delegated authority” from the Pentagon “to provide a product [Agent Orange] that the
[g]overnment was using during war” and that it would otherwise need to produce itself);
cf. Sawyer, 860 F.3d at 255 (holding a private contractor “acted under” a federal superior
by manufacturing boilers for use in U.S. Navy vessels).
Watson addressed one other “important” argument advanced in favor of § 1442
removal by a private corporation—that the FTC delegated testing authority to an
industry-financed laboratory and that Philip Morris was “acting pursuant to that
delegation.” 551 U.S. at 153–54. The Court disagreed, finding “no evidence of any
delegation of legal authority from the FTC to the industry association to undertake testing
on the [g]overnment agency’s behalf.” Id. at 156. “Without evidence of some such
special relationship, Philip Morris’ analogy to [g]overnment contracting br[oke] down.”
Id. at 157.
This analysis of Watson and related caselaw indicates which types of contracts
between federal superiors and private firms are special enough to satisfy the “acting
under” prong for § 1442 removal. The private firm must go beyond mere compliance
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with contractual terms, even if complex, and agree to help carry out the duties or tasks of
the federal superior under that superior’s strict guidance or control. And this closely
supervised work must help federal officers fulfill basic government needs, accomplish
key government tasks, or produce essential government products—that is, it must stand in
for critical efforts the federal superior would need to undertake itself in the absence of a
private contract. Wartime production is the paradigmatic example for this special
relationship. Alternately, the “acted under” element may be established through the
explicit contractual delegation of legal authority to act on the federal superior’s behalf.
Here, Exxon’s contractual relationship with the DOI does not meet these
guidelines. By winning bids for leases to extract fossil fuels from federal land in
exchange for royalty payments, Exxon is not assisting the government with essential
duties or tasks. See Baltimore II, 952 F.3d at 465 (expressing skepticism “that the
willingness to lease federal property or mineral rights to a private entity for the entity’s
own commercial purposes, without more, could ever be characterized as the type of
assistance that is required to trigger the government-contractor analogy”). Critically, the
leases do not obligate Exxon to make a product specially for the government’s use, as in
Winters, Isaacson, and Sawyer.
The government can (and does) purchase some of the fuel produced by Exxon via
its OCS leases, as it does from others in the marketplace. But the OCS leases do not
require Exxon to tailor fuel production to detailed government specifications aimed at
satisfying pressing federal needs. Compare Winters, 149 F.3d at 399 (referencing precise
government specifications for Agent Orange that “included use of the two active
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chemicals in unprecedented quantities for the specific purpose of stripping” vegetation),
with Washington v. Monsanto Co., 738 F. App’x 554, 555 (9th Cir. 2018) (unpublished)
(explaining the government’s off-the-shelf purchase of a defendant’s product does not
show that the government “supervised [the defendant’s] manufacture . . . or directed [the
defendant] to produce [the product] in a particular manner, so as to come within the
meaning of ‘act[ed] under’” (quoting 28 U.S.C. § 1442(a)(1))). Nor do the leases obligate
Exxon to perform services for the government.
Additionally, the OCS leases do not appear to contemplate the type of “close
supervision of the private entity by the [g]overnment” needed to bring a government
contractor relationship within the meaning of § 1442. Isaacson, 517 F.3d at 137. As the
district court reasoned, “the government does not control the manner in which [Exxon]
drill[s] for oil and gas, or develop[s] and produce[s] the product,” nor has Exxon “shown
that a federal officer instructed [it] how much fossil fuel to sell.” App. at 242; accord
Baltimore II, 952 F.3d at 466 (noting that “the leases do not appear to dictate that
[the d]efendants extract fossil fuels in a particular manner,” “vest the government with
control over the composition of oil or gas to be refined and sold to third parties,” or
“affect the content or methods of [the d]efendants’ communications with customers,
consumers, and others about [the d]efendants’ fossil-fuel products” (citations and
quotation marks omitted)). Furthermore, many of the terms in the OCS leases “are mere
iterations of the OCSLA’s regulatory requirements,” and compliance with such
requirements, no matter their level of complexity, cannot by itself trigger the “acting
under” relationship. Baltimore II, 952 F.3d at 465; see also Watson, 551 U.S. at 152.
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The Energy Companies attack these conclusions by contending that “the operative
leases explicitly afford the federal government the right to control the rates of mining and
production.” Appellants Br. at 40. The support for this argument comes from a provision
in the 1979 lease, which states, “[a]fter due notice in writing, the Lessee shall drill such
wells and produce at such rates as the Lessor may require in order that the leased area . . .
may be properly and timely developed . . . .” App. 50 § 10. But there is also no allegation
that the government ever actually directed Exxon’s drilling activity or rates of production
through its OCS land leases.
The same goes for the Energy Companies’ citation to the government’s wartime
right of first refusal. Even if the exercise of these clauses would create the requisite level
of federal supervision, the Energy Companies cite no authority for the proposition that
the simple reservation of such rights by the government, without exercising those rights,
places a contractor in the special relationship needed for a private firm to invoke the
removal statute. See Mays v. City of Flint, 871 F.3d 437, 447 (6th Cir. 2017) (disagreeing
with the “argument that this ability to intervene [by the federal government] supports
the[] invocation of federal-officer removal” in the absence of actual intervention).
Last, Exxon cannot show the type of legal delegation that the Watson Court
hypothesized would be sufficient to conclude a private corporation was “acting under” a
government superior. None of the provisions of the OCS leases “establish the type of
formal delegation that might authorize [defendants] to remove the case.” Watson, 551
U.S. at 156. And “neither Congress nor federal agencies normally delegate legal authority
to private entities without saying that they are doing so.” Id. at 157.
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Because Exxon has not established that it acted under a federal officer by
complying with the terms of its OCS leases, we do not need to reach the remaining
elements for federal officer removal. We hold that the Energy Companies have not
established federal officer removal jurisdiction and affirm the district court on this
removal ground.
28 U.S.C. § 1441: Original Jurisdiction
The Energy Companies also contend that removal is available pursuant to 28
U.S.C. § 1441(a), the general removal statute, which allows for removal of “any civil
action brought in a State court of which the district courts of the United States have
original jurisdiction.” As relevant here, Congress has provided that federal “district courts
shall have original jurisdiction of all civil actions arising under the Constitution, laws, or
treaties of the United States.” 28 U.S.C. § 1331. A defendant can remove an action
provided at least one claim falls within original federal jurisdiction. 28 U.S.C. § 1367(a);
Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 563 (2005).
On appeal, the Energy Companies claim federal jurisdiction exists under § 1441
and § 1331 on five separate grounds. First, they contend the Municipalities’ claims arise
under federal common law. Second, they claim federal jurisdiction exists because the
CAA completely preempts the state-law claims. Third, the Energy Companies argue the
Municipalities’ claims necessarily raise substantial issues of federal policy. Fourth, they
assert federal enclave jurisdiction. Fifth, they argue there is original federal jurisdiction
under the OCSLA. We begin with an overview of the limitations of § 1331 jurisdiction,
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then we discuss how those principles apply to each of the five grounds asserted for
federal jurisdiction.
a. 28 U.S.C. § 1331Although § 1331 mirrors the “arising under” jurisdictional grant in Article III,
statutory federal-question jurisdiction is interpreted more restrictively than its
constitutional counterpart, which extends jurisdiction to all cases where a federal question
is “‘an ingredient’” of the action. See Merrell Dow Pharms. Inc. v. Thompson, 478 U.S.
804, 807 (1986) (quoting Osborn v. Bank of the U.S., 22 U.S. 738, 823 (1824) (Marshall,
C.J.)). “In exploring the outer reaches of § 1331,” the Court has emphasized that
“determinations about federal jurisdiction require sensitive judgments about
congressional intent, judicial power, and the federal system.” Id. at 810. And it has
“forcefully reiterated” that this jurisdictional inquiry necessitates “prudence and
restraint.” Id.
i. The well-pleaded complaint rule
The Supreme Court has cabined jurisdiction under § 1331 by application of the
well-pleaded complaint rule, which provides “that the federal question must appear on
the face of a well-pleaded complaint and may not enter in anticipation of a defense.”
Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 494 (1983). As a result, the
well-pleaded complaint rule is a “powerful doctrine” that “severely limits the number of
cases in which state law ‘creates the cause of action’ that may be initiated in or removed
to federal district court.” Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Tr. for
S. Cal., 463 U.S. 1, 9–10 (1983).
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The rule is premised on the notion that the plaintiff is the “master of the claim”
and may “avoid federal jurisdiction by exclusive reliance on state law.” Caterpillar, 482
U.S. at 392. Under the well-pleaded complaint rule, it has long been held that a “plaintiff
may by the allegations of his complaint determine the status with respect to
removability.” Great N. Ry. Co. v. Alexander, 246 U.S. 276, 282 (1918). And the
defendant’s assertion of a defense based on federal law does not transform claims based
on state law into a removable federal question. Louisville & Nashville R.R. Co. v.
Mottley, 211 U.S. 149, 152–54 (1908). Indeed, a federal defense, including preemption,
cannot support removal “even if the defense is anticipated in the plaintiff’s complaint,
and even if both parties admit that the federal defense is the only question truly at issue in
the case.” Franchise Tax Bd., 463 U.S. at 14.
“[F]ederal jurisdiction attaches when federal law creates the cause of action
asserted.” Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, 578 U.S. 374, 383
(2016). The creation test “accounts for the vast bulk of suits that arise under federal law.”
Gunn, 568 U.S. at 257. But there are two exceptions to the well-pleaded complaint rule:
(1) the state-law claims are artfully pleaded/completely preempted by federal law and (2)
the state-law claims necessarily raise a substantial, disputed federal question. Devon
Energy Prod. Co., L.P. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195, 1203–04 (10th
Cir. 2012). Because the exceptions are relevant to this appeal, we describe them here.
ii. Complete preemption/artful pleading exception
Complete preemption is a term of art for an exception (or an independent
corollary) to the well-pleaded complaint rule. Schmeling v. NORDAM, 97 F.3d 1336,
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1339 (10th Cir. 1996). Sometimes complete preemption is also known as artful pleading.
“If a court concludes that a plaintiff has ‘artfully pleaded’ claims” by excluding necessary
federal questions from the pleadings, “it may uphold removal even though no federal
question appears on the face of the plaintiff’s complaint.” Rivet v. Regions Bank of La.,
522 U.S. 470, 475 (1998). The Supreme Court treats the “artful pleading” and “complete
preemption” doctrines as indistinct. See id.4 Thus, “[t]he artful pleading doctrine allows
removal where federal law completely preempts an asserted state-law claim.” Id.Complete preemption applies when “the pre-emptive force of a statute is so
‘extraordinary’ that it ‘converts an ordinary state common-law complaint into one stating
a federal claim for purposes of the well-pleaded complaint rule.’” Caterpillar, 482 U.S. at
393 (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987)). When this happens,
the state-law cause of action becomes “purely a creature of federal law, notwithstanding
the fact that state law would provide a cause of action in the absence of” the federal law.
Franchise Tax Bd., 463 U.S. at 23. Upon the doctrine’s proper invocation, “a complaint
alleging only a state law cause of action may be removed to federal court on the theory
that federal preemption makes the state law claim ‘necessarily federal in character.’”
Schmeling, 97 F.3d at 1339 (quoting Metro. Life, 481 U.S. at 63–64).
4
“The absence from Justice Ginsburg’s [Rivet] opinion of any reference to a
category of artful pleading that is conceptually distinct from the complete preemption
doctrine hints that completely preempted claims may be the only claims to which the
artful-pleading doctrine should apply.” 14C CHARLES A. WRIGHT ET AL., FEDERAL
PRACTICE & PROCEDURE § 3722.1 (Rev. 4th ed. 2021).
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To determine whether a state-law claim is completely preempted by federal law,
we apply a two-step analysis: “first, we ask whether the federal question at issue
preempts the state law relied on by the plaintiff; and second, whether Congress intended
to allow removal in such a case, as manifested by the provision of a federal cause of
action.” Dutcher, 733 F.3d at 985–86 (quotation marks omitted). Because the first prong
implicates the merits of an ordinary preemption defense, which cannot support removal,
the removal analysis begins with the second prong. See Metro. Life, 481 U.S. at 66(“[T]he touchstone of the federal district court’s removal jurisdiction is not the
‘obviousness’ of the pre-emption defense but the intent of Congress.”).
A part of the congressional intent analysis is whether there is “a potential federal
cause of action,” the existence of which “is critical” because “complete preemption is not
the same as preemption.” Dutcher, 733 F.3d at 986. “That is, a state cause of action may
not be viable because it is preempted by a federal law—but only if federal law provides
its own cause of action does the case raise a federal question that can be heard in federal
court.” Id. To completely preempt, “the federal cause of action need not provide the same
remedy as the state cause of action.” Schmeling, 97 F.3d at 1343. However, “the federal
remedy at issue must vindicate the same basic right or interest that would otherwise be
vindicated under state law.” Devon Energy, 693 F.3d at 1207.
“‘Complete preemption is a rare doctrine.’” Id. at 1204 (quoting Cmty. State Bank
v. Strong, 651 F.3d 1241, 1260 n.16 (11th Cir. 2011)). The Supreme Court has
recognized it in just three statutory contexts: § 301 of the Labor Management Relations
Act, § 502 of ERISA, and usury actions under the National Bank Act. Devon Energy, 693
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F.3d at 1204–05. This circuit has also recognized the complete preemptive effect of the
Securities Litigation Uniform Standards Act. See Anderson v. Merrill Lynch Pierce
Fenner & Smith, Inc., 521 F.3d 1278, 1283–84 (10th Cir. 2008).
iii. Substantial federal-question jurisdiction (Grable jurisdiction)
The Supreme Court has instructed that “a federal court ought to be able to hear
claims recognized under state law that nonetheless turn on substantial questions of federal
law.” Grable, 545 U.S. at 312. This is true “[e]ven though state law creates [a plaintiff’s]
causes of action” because a “case might still ‘arise under’ the laws of the United States if
a well-pleaded complaint established that its right to relief under state law requires
resolution of a substantial question of federal law in dispute between the parties.”
Franchise Tax Bd., 463 U.S. at 13. But this circumstance describes a “special and small
category” of cases. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699
(2006).
A federal court can exercise federal-question jurisdiction over an action that
pleads only state-law claims if those claims “require[] resolution of a substantial question
of federal law in dispute between the parties.” Franchise Tax Bd., 463 U.S. at 13. The
Supreme Court set out the standard for substantial question jurisdiction in Grable. The
Court explained that the relevant question is, “does a state-law claim necessarily raise a
stated federal issue, actually disputed and substantial, which a federal forum may
entertain without disturbing any congressionally approved balance of federal and state
judicial responsibilities.” Grable, 545 U.S. at 314.
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Like complete preemption, “[t]he ‘substantial question’ branch of federal question
jurisdiction is exceedingly narrow.” Gilmore v. Weatherford, 694 F.3d 1160, 1171 (10th
Cir. 2012). It is not triggered by a “mere need to apply federal law in a state-law claim.”
Grable, 545 U.S. at 313. Nor can it be triggered solely by a federal defense, in keeping
with the well-pleaded complaint rule. Becker v. Ute Indian Tribe of the Uintah & Ouray
Rsrv., 770 F.3d 944, 947 (10th Cir. 2014).
***
Having discussed the limits of § 1331 federal jurisdiction, we now turn to the
Energy Companies’ grounds for removal jurisdiction under § 1331: (1) the claims arise
under federal common law, (2) the CAA completely preempts the claims, (3) the claims
raise a substantial federal issue, (4) there is federal enclave jurisdiction, and (5) there is
original jurisdiction under the OCSLA.
b. Claims arise under federal common law
The Energy Companies argue there is federal-question jurisdiction over the
Municipalities’ state-law claims because they are governed by federal common law. The
district court concluded federal common law did not create the cause of action because a
federal common law claim was not alleged on the face of the Amended Complaint.
Additionally, the district court determined that the federal common law did not
completely preempt the state-law claims. The district court held that, at best, the
argument that the Municipalities’ “state law claims are governed by federal common law
[would] be a matter of ordinary preemption,” which is “a defense to the complaint, and
does not render a state-law claim removable.” App. at 215–16.
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It is undisputed that the Municipalities did not explicitly allege a claim under
federal common law in the Amended Complaint. But the Energy Companies contend the
Municipalities drafted their Amended Complaint to conceal the federal character of their
claims. We begin by considering whether federal common law governs claims related to
climate change, as the Energy Companies contend. Then, we turn to the question of
whether the federal common law creates the Municipalities’ causes of action.
i. Relevant case law
“There is no federal general common law,” Erie R.R. Co. v. Tompkins, 304 U.S.
64, 78 (1938), but there remain limited areas of “‘specialized federal common law,’” Am.
Elec. Power Co., Inc. v. Connecticut (AEP), 564 U.S. 410, 421 (2011) (quoting Friendly,
In Praise of Erie—And of the New Federal Common Law, 39 N.Y.U. L. REV. 383, 405
(1964)). “The cases in which federal courts may engage in common lawmaking are few
and far between.” Rodriguez v. FDIC, 140 S. Ct. 713, 716 (2020). Among them is when
“a federal rule of decision is ‘necessary to protect uniquely federal interests.’” Tex.
Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640 (1981) (quoting Banco
Nacional de Cuba v. Sabbatino, 376 U.S. 398, 426 (1964)). The Energy Companies
assert that the Municipalities’ claims here are governed by the federal common law of
transboundary pollution. Accordingly, we begin with a discussion of the primary caselaw
on which the Energy Companies rely.
In Illinois v. City of Milwaukee (Milwaukee I), 406 U.S. 91, 93 (1972), Illinois
filed an original complaint in the Supreme Court on a theory of public nuisance against
Milwaukee and several other Wisconsin cities for allegedly polluting Lake Michigan. The
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Court first held that cases arising under federal common law fall under the ambit of
§ 1331. Id. at 100. While ultimately declining to exercise original jurisdiction over the
substantive claims, the Court stated, “there is a federal common law” concerning “air and
water in their ambient or interstate aspects.” Id. at 103. In this area, “federal law
governs,” and “state statutes or decisions are not conclusive.” Id. at 105, 107. But the
Court projected “that new federal laws and new federal regulations may in time pre-empt
the field of federal common law of nuisance.” Id. at 107.
In the 1970s, Congress passed major updates to the Clean Water Act. City of
Milwaukee v. Illinois (Milwaukee II), 451 U.S. 304, 308 (1981). After these amendments,
Illinois and Michigan filed a separate suit in federal district court under federal common
law, seeking abatement of the public nuisance allegedly created by Lake Michigan
sewage discharges. Id. at 310. The district court resolved the action in Illinois’s favor. Id.
at 312. The Seventh Circuit agreed that the federal common law of nuisance survived the
1972 amendments to the Water Pollution Control Act but held that courts should look to
the amendments’ “‘policies and principles for guidance.’” Id. at 312 (quoting Illinois v.
City of Milwaukee, 599 F.2d 151, 164 (7th Cir. 1979), vacated & remanded by 451 U.S.
304). The defendants appealed, and in Milwaukee II, the Court considered “the effect of
this legislation on the previously recognized cause of action.” Id. at 308. As detailed
below, the Supreme Court disagreed about the effects of the amendments and vacated the
Seventh Circuit’s decision.
The Court explained that in the absence of congressional action, “and when there
exists a ‘significant conflict between some federal policy or interest and the use of state
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law,’ the Court has found it necessary, in a ‘few and restricted’ instances, to develop
federal common law.” Id. at 313 (first quoting Wallis v. Pan Am. Petrol. Corp., 384 U.S.
63, 68 (1966); and then quoting Wheeldin v. Wheeler, 373 U.S. 647, 651 (1963)). This
exercise is only “a ‘necessary expedient,’” however, “and when Congress addresses a
question previously governed by a decision rested on federal common law the need for
such an unusual exercise of lawmaking by federal courts disappears.” Id. at 314 (quoting
Comm. for Consideration of Jones Falls Sewage Sys. v. Train, 539 F.2d 1006, 1008 (4th
Cir. 1976)). The Court ruled that the “self-consciously comprehensive” water pollution
amendments left “no room for courts to attempt to improve on that program with federal
common law.” Id. at 319.
In rejecting Illinois’s argument that the Act’s savings provision, § 510, preserved
federal common law, the Court further stated,
It is one thing . . . to say that States may adopt more stringent limitations
through state administrative processes, or even that States may establish
such limitations through state nuisance law, and apply them to in-state
discharges. It is quite another to say that the States may call upon federal
courts to employ federal common law to establish more stringent standards
applicable to out-of-state dischargers.
Id. at 327–28 (first emphasis added). Thus, the amendments to the Clean Water Act
displaced the federal common law for water-based transboundary pollution.
What Milwaukee II did to the federal common law of interstate water pollution,
AEP did to the federal common law of interstate air pollution. In AEP, several states sued
a few power companies and the Tennessee Valley Authority in federal court, asserting the
companies’ CO2 emissions contributed to global warming and interfered with public
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rights in violation of the federal common law of interstate nuisance, or, in the alternative,
state tort law. 564 U.S. at 418. They sought injunctive relief in the form of emissions
caps. Id. at 419. The Second Circuit held the plaintiffs had stated a claim under the
“‘federal common law of nuisance,’” but the Court reversed. Id. (quoting Connecticut v.
Am. Elec. Power Co., Inc., 582 F.3d 309, 358, 371 (2d Cir. 2009), rev’d by 564 U.S.
410).
The Court first noted the history of “federal common-law suits brought by one
State to abate pollution emanating from another State,” where “borrowing the law of a
particular State would be inappropriate.” Id. at 421–22. But it said determining whether
“the plaintiffs could state a federal common-law claim for curtailment of greenhouse gas
emissions because of their contribution to global warming” was now “an academic
question,” because “the [CAA] and the EPA actions it authorizes displace any federal
common-law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired
powerplants.” Id. at 423–24.
In closing, the Court briefly addressed the plaintiffs’ state-law nuisance claims. It
first noted that if a case “should be resolved by reference to federal common law[,] . . .
state common law [is] pre-empted.” Id. at 429 (quoting Int’l Paper Co. v. Ouellette, 479
U.S. 481, 488 (1987)). Thus, due to the Court’s “holding that the [CAA] displaces federal
common law, the availability vel non of a state lawsuit depends, inter alia, on the
preemptive effect of the federal Act.” Id. (citing Ouellette’s “holding that the Clean
Water Act does not preclude aggrieved individuals from bringing a ‘nuisance claim
pursuant to the law of the source State’” (quoting 479 U.S. at 497)). But because no party
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briefed preemption or “the availability of a claim under state nuisance law,” the Court left
the matter open. Id.The Ninth Circuit applied AEP in Native Village of Kivalina v. ExxonMobil Corp.,
696 F.3d 849 (9th Cir. 2012). There, an Alaskan village sued various energy producers,
including Exxon, for climate change-related harms in federal district court, alleging
violation of the federal common law of nuisance. Id. at 854. Kivalina’s claims were
slightly different than those of the AEP plaintiffs: it sought damages for harm caused by
past emissions rather than emissions abatement. Id. at 857. But “the type of remedy
asserted is not relevant to the applicability of the doctrine of displacement.” Id. “When
Congress has acted to occupy the entire field”—as it did through the CAA in regard to
domestic greenhouse gas emissions—“that action displaces any previously available
federal common law action.” Id. “Thus, AEP extinguished Kivalina’s federal common
law public nuisance damage action, along with the federal common law public nuisance
abatement actions.” Id. In other words, the federal common law of nuisance that formerly
governed transboundary pollution suits no longer exists due to Congress’s displacement
of that law through the CAA.5 “Simply put,” this case could “not have been removed to
5
Even if the pre-AEP federal common law of transboundary pollution remained
viable, however, it is unclear whether our case is properly placed within that realm. In
AEP, the Court recognized this “specialized federal common law” as applying to “suits
brought by one State to abate pollution emanating from another State,” and did not
decide “whether private citizens . . . or political subdivisions . . . of a State may invoke
the federal common law of nuisance to abate out-of-state pollution.” Am. Elec. Power
Co., Inc. v. Connecticut, 564 U.S. 410, 421–22 (2011) (emphasis added). Thus, it is an
“open question” whether the Municipalities are “the type of part[ies] that can bring a
federal common law nuisance claim.” Native Vill. of Kivalina v. ExxonMobil Corp., 696
F.3d 849, 866 (9th Cir. 2012) (Pro, J., concurring). It is also unsettled whether the federal
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federal court on the basis of federal common law that no longer exists.” Cnty. of San
Mateo v. Chevron Corp., 294 F. Supp. 3d 934, 937 (N.D. Cal. 2018), aff’d in part, 960
F.3d 586 (9th Cir. 2020), vacated on other grounds, 141 S. Ct. 2666 (2021) (Mem.).
Kivalina also brought a state-law nuisance claim, which the district court
dismissed without prejudice, and without being addressed by the Ninth Circuit majority.
In a concurring opinion, Judge Pro stressed that Kivalina may have retained its causes of
action under state law: “Once federal common law is displaced, state nuisance law
becomes an available option to the extent it is not preempted by federal law.” Kivalina,
696 F.3d at 866 (relying upon AEP’s statement that “the availability vel non of a state
lawsuit depends, inter alia, on the preemptive effect of the federal Act” (quoting 564 U.S.
at 429)). Judge Pro therefore concluded that “Kivalina may pursue whatever remedies it
may have under state law to the extent their claims are not preempted.” Id.Thus, the question is whether the federal act that displaced the federal common
law preempted the state-law claims. And because ordinary preemption can never serve as
a basis for removal, a state lawsuit brought under state law in the transboundary pollution
context could be removed by means of a federal question only through the doctrine of
complete preemption.
common law of interstate pollution covers suits brought against product sellers rather
than emitters—suits in which “out-of-state third-party emitters” are only “steps in the
causal chain.” Appellee Br. at 27. While several district courts have held it does, basing
removal on an unsettled question of federal common law would cut against “the need for
careful judgments about the exercise of federal judicial power in an area of uncertain
jurisdiction.” Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 814 (1986).
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In sum, the Energy Companies’ argument that the Municipalities’ claims “arise
under” federal common law fails because the reliance on only state-law claims leaves
complete preemption as the sole path for federal removal jurisdiction. As instructed in
AEP and supported by Kivalina, we look to the federal act that displaced the federal
common law to determine whether the state claims are preempted. In this case, that
would be the CAA. Before considering whether the CAA completely preempts the field,
however, we pause to address the Energy Companies argument that the Municipalities
artfully pleaded their state-law claims to avoid the federal nature of their federal common
law claims.
ii. Artful pleading/complete preemption
The Energy Companies assert that despite stating only state-law claims, it is
nonetheless clear from the face of the complaint that “federal common law supplies the
rule of decision for th[e]se claims.” Appellants Br. at 26. For the reasons we now explain,
we reject this argument.
While the Energy Companies assert their argument is “not merely a question of
pleading,” Reply Br. at 7, they essentially contend the Municipalities have engaged in
“artful pleading” by attempting to conceal the federal character of their claims in state
garb, see Appellants Br. at 26 (citing a portion of a district court opinion that references
“artful pleading”); Reply Br. at 7–8 (quoting a section of Wright & Miller’s treatise titled
“Removal Based on Artful Pleading” for the proposition that “a plaintiff cannot ‘block
removal’ by attempting to ‘disguise [an] inherently federal cause of action’” (quoting
14C CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3722.1 (2d ed.
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2019))). This reliance on the “artful pleading” exception to the well-pleaded complaint
rule, however, is misplaced. For purposes of federal subject-matter jurisdiction, we look
to the face of the complaint and assess whether the plaintiff has advanced a federal claim.
Verlinden, 461 U.S. at 494. It is only when the merits of a defense based on “complete
preemption” are considered that the court is free to look behind the plaintiff’s chosen
claims to determine whether federal law has completely preempted the area.
As noted, complete preemption requires congressional intent. See Metro. Life, 481
U.S. at 65–66. Because federal common law is created by the judiciary—not Congress—
Congress has not “clearly manifested an intent” that the federal common law for
transboundary pollution will completely preempt state law. Id. at 66. Therefore, the
federal common law for transboundary pollution cannot completely preempt the
Municipalities’ state-law claims. See Marcus v. AT&T Corp., 138 F.3d 46, 54 (2d Cir.
1998) (applying the same reasoning and holding that “federal common law does not
completely preempt state law claims in the area of interstate telecommunications”).
The importance of the procedural posture of the lawsuit for purposes of removal
jurisdiction was recently emphasized by the Second Circuit in City of New York v.
Chevron Corp., 993 F.3d 81 (2d Cir. 2021). There, the city brought state nuisance claims
against various multi-national oil companies, alleging the companies were liable for
damages caused by global warming. Id. at 88. Importantly, the city initiated the action in
federal court, and thus, the issues before the district court and the circuit were not within
the context of removal. Id. Instead, the district court granted the oil companies’ motions
to dismiss the action under Federal Rule of Civil Procedure 12(b)(6) because the CAA
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displaced the city’s common law claims with respect to domestic emissions, and “judicial
caution counseled against” entertaining the city’s claims based on foreign greenhouse
emissions. Id. at 88–89.
On appeal, the Second Circuit affirmed on the same grounds. Id. at 89–103.
Importantly for our purposes, the circuit court acknowledged and explained the tension
between its conclusion that federal common law displaced the city’s state-law claims and
the “parade of recent opinions holding that ‘state-law claims for public nuisance brought
against fossil-fuel producers do not arise under federal law.’” Id. at 93 (quoting City of
Oakland v. BP P.L.C., 960 F.3d 570, 575 (9th Cir. 2020), amended & superseded on
denial of reh’g, 969 F.3d 895 (9th Cir. 2020)). The court explained that each of the
decisions that concluded federal common law did not preempt the plaintiff’s state-law
claims had done so in different procedural context—removal. Id. Unlike in the removal
context, the Second Circuit was permitted to consider the defendants’ ordinary
preemption defense when analyzing whether the city had failed to state a claim.
In the removal context, however, only complete preemption can support removal.
And because the federal common law does not completely preempt state law, removal is
not warranted under the artful pleading or complete preemption exception to the
well-pleaded complaint rule. The Municipalities have pleaded only state-law causes of
action. And at this stage of the proceedings, we do not look behind those allegations.6
6
The Energy Companies raise an alternative basis for jurisdiction under the
federal common law in their supplemental brief. First, they assert that “the Ninth Circuit
erred by analyzing the federal-common-law argument under the Grable framework” in
City of Oakland v. BP PLC, 969 F.3d 895, 906 (9th Cir. 2020), cert. denied, 141 S. Ct.
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c. CAA Complete Preemption
Having determined that the federal common law does not completely preempt the
state-law claims, we now consider whether the federal act that displaced the federal
common law—the CAA—completely preempts them. The district court held that it does
not, reasoning that the CAA does not govern the sale of fossil fuels, and it “expressly
preserves many state common law causes of action.” App. at 228. “From this,” the
district court determined “Congress did not intend the [CAA] to provide exclusive
remedies in these circumstances, or to be a basis for removal under the complete
preemption doctrine.” Id. The district court explained that the preemption argument based
on emissions standards must “be resolved in connection with an ordinary preemption
defense, a matter that does not give rise to federal jurisdiction.” Id. at 232.
2776 (2021). Appellants Supp. Br. at 13. But they also say, “[e]ven if the Ninth Circuit
were correct to invoke the Grable framework” in relation to the federal common law, it
would support removal. Id. The Energy Companies did not raise this argument in their
opening brief. They also failed to raise this argument in their Notice of Removal, and
they do not argue that plain error would result if we did not reverse the district court on
this ground. Thus, the Energy Companies waived this argument. See Sawyers v. Norton,
962 F.3d 1270, 1286 (10th Cir. 2020) (“Issues not raised in the opening brief are deemed
abandoned or waived.” (quotation marks omitted)); United States v. Leffler, 942 F.3d
1192, 1196 (10th Cir. 2019) (“When an appellant fails to preserve an issue and also fails
to make a plain-error argument on appeal, we ordinarily deem the issue waived.”). For
this reason, we decline to consider Grable jurisdiction as it relates to the federal common
law in this appeal. See 14C CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE &
PROCEDURE § 3733 (Rev. 4th ed. 2021) (explaining “defendants may not add completely
new grounds for removal . . . , and the court will not, on its own motion, retain
jurisdiction on the basis of a ground that is present but that defendants have not relied
upon” in their notice of removal).
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The Energy Companies point to two provisions of the CAA they claim completely
preempt the state-law claims. First, they highlight the CAA’s citizen-suit provision
authorizing private challenges to rulemakings, or the absence of such rulemakings, by the
EPA. See 42 U.S.C. § 7604(a). Second, they rely on the CAA’s “path for private parties
to petition EPA to undertake new rulemakings, the response to which is reviewable in
federal court.” Appellants Br. at 35 (citing 42 U.S.C. § 7607(b)(1) and 5 U.S.C.
§ 553(e)). But neither provision establishes complete preemption.
The Energy Companies acknowledge complete preemption applies when “a
federal statutory scheme ‘provide[s] the exclusive cause of action for the claim asserted.’”
Appellants Br. at 34 (quoting Beneficial Nat’l Bank v. Anderson, 539 U.S. at 8)
(emphasis added). But the CAA does not provide an exclusive federal cause of action for
suits against private polluters, nor does it completely displace all state law in that area. To
the contrary, § 7604 says “[n]othing in this section shall restrict any right which any
person . . . may have under any statute or common law to seek enforcement of any
emission standard or limitation or to seek any other relief.” 42 U.S.C. § 7604(e). Indeed,
we have recognized that “[t]he purpose of the [CAA] is to control and improve the
nation’s air quality through a combination of state and federal regulation.” Ariz. Pub.
Serv. Co. v. EPA, 562 F.3d 1116, 1118 (10th Cir. 2009) (emphasis added). In other
words, the CAA is designed to provide a floor upon which state law can build, not a
ceiling to stunt complementary state-law actions. See 42 U.S.C. § 7416 (stating nothing
in the CAA “shall preclude or deny the right of any State or political subdivision thereof”
to adopt an emissions standard or limitation more stringent than the federal version); id.36
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§ 7412(r)(11) (similar provision regarding “prevention of accidental releases”). “A statute
that goes so far out of its way to preserve state prerogatives cannot be said to be an
expression of Congress’s ‘extraordinary pre-emptive power’ to convert state-law into
federal-law claims.” Rhode Island v. Chevron Corp., 393 F. Supp. 3d 142, 150 (D.R.I.
2019) (quoting Metro. Life, 481 U.S. at 65).
Even setting aside this savings clause, § 7604(a) creates causes of action against
private companies only in specified circumstances that are not present here. Section
7604(a)(1) allows a private action for the violation of a CAA emissions standard, a
limitation established by the CAA, or the violation of an official order; § 7604(a)(2)
allows a private action against the Administrator for failing to perform a nondiscretionary
act or duty; and § 7604(a)(3) permits a private suit for the construction (or proposed
construction) of an emitting facility without the required federal permit, or for the
violation of the conditions of such a permit. The Municipalities’ claims do not concern
CAA emissions standards or limitations, government orders regarding those standards or
limitations, or federal air pollution permits. Indeed, their suit is not brought against
emitters. Rather, the Municipalities’ claims are premised on the Energy Companies’
activities of “knowingly producing, promoting, refining, marketing and selling a
substantial amount of fossil fuels used at levels sufficient to alter the climate, and
misrepresenting the dangers.” App. at 173. Section 7604(a) expressly does not “vindicate
the same basic right or interest” as the Municipalities’ state-law claims, Devon Energy,
693 F.3d at 1207, and thus cannot completely preempt those claims.
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The same is true with respect to § 7607(b)(1), which governs judicial review of
administrative proceedings. This section lays out the procedure for filing in a federal
court “[a] petition for review of action of the [EPA] Administrator” taken under the
CAA. As such, it does not “vindicate the same basic right or interest” as the
Municipalities’ state-law claims, Devon Energy, 693 F.3d at 1207, nor do those claims
“duplicate[], supplement[], or supplant[]” § 7607(b)(1), Aetna Health Inc. v. Davila, 542
U.S. 200, 209 (2004). Indeed, § 7607(b)(1) does not allow for suits against private parties
at all.
In Devon Energy, we held the availability of judicial review of federal
administrative action does not displace comparable state-law claims against private
parties. 693 F.3d at 1207. There, Devon, an oil and gas producer, mistakenly drilled a
well at a location in New Mexico’s “Potash Area”—a mineral-rich reserve managed by
the federal Bureau of Land Management (“BLM”)—without BLM permission. Id. at
1198. BLM subsequently reviewed and approved the placement of Devon’s Apache
Well. Id. at 1199. Mosaic, a potash mining company, claimed that Devon’s initial
mistaken placement of the Apache Well had wasted resources and caused Mosaic
damage. Id. Unable to reach a settlement, Devon sued Mosaic in federal court, seeking “a
declaratory judgment that federal law completely preempted Mosaic’s anticipated
state-law claims emanating from Devon’s unauthorized drilling.” Id. at 1198. Devon
asserted that Mosaic’s only available remedies were “the federal administrative and
judicial remedies under the Administrative Procedure Act.” Id. at 1200 (quotation marks
omitted).
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This court disagreed: “While Mosaic may have been able to appeal the BLM’s
approval of the Apache Well, the availability of an administrative remedy against the
BLM has no bearing on whether Mosaic’s state law claims against Devon have been
completely supplanted by a private federal cause of action.” Id. at 1207 (quotation marks
omitted). Mosaic was not challenging federal agency action or inaction but rather those
actions taken by the private party, Devon, that resulted in injury to Mosaic. “Thus, even if
pursuing relief through the APA might ultimately have resulted in the Apache Well being
plugged and abandoned, it would not have compensated Mosaic for any damages
stemming from Devon’s initial act of drilling at an unapproved well site.” Id. As a result,
the APA did not provide a federal cause of action comprehensive enough to completely
preempt related state-law claims.
This logic bars § 7607(b)(1) from serving to completely preempt the
Municipalities’ state-law claims. Even if those claims could be characterized as
challenges to the air quality and emissions standards covered by the CAA, the availability
of an administrative remedy against EPA would have no bearing on whether the
Municipalities’ state-law claims against the Energy Companies are completely preempted
by a private federal cause of action. And even if pursuing relief against EPA through
§ 7607(b)(1) might ultimately lead to lower emissions in Colorado, it would not
compensate the Municipalities for damages stemming from the Energy Companies’
allegedly tortious fossil-fuel activities, which is the compensation they seek in this suit.7
7
Because neither of the CAA provisions highlighted by the Energy Companies
“vindicate the same basic right or interest” as the Municipalities’ state-law claims, Devon
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The courts that have considered this question agree the CAA does not completely
preempt this type of climate change action.8 We agree with these well-reasoned decisions
and affirm the district court’s rejection of complete preemption by the CAA as a basis for
federal jurisdiction.
d. Substantial federal-question jurisdiction (Grable jurisdiction)
Next, the Energy Companies argue that the Municipalities’ state-law claims
necessarily raise disputed, substantial federal issues suitable for federal court
resolution—both because the claims relate to the federal government’s conduct of foreign
affairs and because they “amount to a collateral attack on cost-benefit analyses
committed to, and already performed by, the federal government.” Appellants Br. at 28.
The elements for substantial federal question—or Grable—jurisdiction are that the
“federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and
Energy Prod. Co., L.P. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195, 1207 (10th Cir.
2012), it is unnecessary to address the significance of the absence of any cause of action
for damages in the CAA.
8
See City of Oakland v. BP PLC, 969 F.3d at 907–08 (9th Cir. 2020) (“Thus, the
[CAA] satisfies neither requirement for complete preemption.”); Rhode Island v. Chevron
Corp., 393 F. Supp. 3d 142, 150 (D.R.I. 2019) (“[T]he CAA authorizes nothing like the
State’s claims, much less to the exclusion of those sounding in state law.”); Baltimore I,
388 F. Supp. 3d at 562 (explaining “the absence of any indication that Congress intended
for these causes of action in the CAA to be the exclusive remedy for injuries stemming
from air pollution” is “[f]atal to defendants’ argument”); Cnty. of San Mateo v. Chevron
Corp., 294 F. Supp. 3d 934, 938 (N.D. Cal. 2018) (“[T]he [CAA] and the Clean Water
Act both contain savings clauses that preserve state causes of action and suggest that
Congress did not intend the federal causes of action under those statutes ‘to be
exclusive.’” (quoting Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 9 n.5 (2003))).
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(4) capable of resolution in federal court without disrupting the federal-state balance
approved by Congress.” Gunn, 568 U.S. at 258.
The district court rejected the Energy Companies’ argument that the
Municipalities’ “claims necessarily depend on a resolution of a substantial question” of
federal policy. App. at 217. It determined that the Energy Companies had not cited any
binding foreign policies or explained how this case would interfere with the policies they
did cite. The district court also held that the policies the Energy Companies cited failed to
satisfy two of the four elements for Grable jurisdiction: they were neither “necessarily
raised” nor “substantial.” Id. at 219–25. As discussed below, we similarly conclude the
federal issues asserted are neither necessary to the Municipalities’ claims nor substantial
to the federal system. As a result, this case does not fit within that “slim category” of
state-law disputes that merit removal based on the presence of a substantial federal
question. Gunn, 568 U.S. at 258.
i. Necessarily raised
“To determine whether an issue is ‘necessarily’ raised, the Supreme Court has
focused on whether the issue is an ‘essential element’ of a plaintiff’s claim.” Gilmore,
694 F.3d at 1173 (quoting Grable, 545 U.S. at 315). For example, in Grable, the Court
exerted federal-question jurisdiction over a state court action because the meaning of a
federal statute “appear[ed] to be the only legal or factual issue contested.” 545 U.S. at
315. Likewise, in Smith v. Kansas City Title & Trust Co.,“[t]he decision depend[ed] upon
the determination of” “the constitutional validity of an act of Congress which [was]
directly drawn in question,” 255 U.S. 180, 201 (1921). And in Merrill Lynch, the Court
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confirmed federal-question jurisdiction would lie over a state court action brought to
enforce a federal duty “because the claim’s very success depends on giving effect to a
federal requirement.” 578 U.S. at 384.
The Energy Companies contend that the Municipalities’ suit “implicates federal
issues” because it “interfere[s] with” the federal government’s longstanding “policy of
pursuing economic growth rather than imposing emissions limits under imbalanced
international agreements.” Appellants Br. at 29–30. The Energy Companies attempt to
establish this specific foreign policy by citing multiple federal sources from different
branches of government that span four decades and feature different levels of binding
legal effect. Id. at 28–30 (citing remarks by Presidents Ford and Trump, an executive
order from President Reagan, a Senate resolution responding to President Clinton’s
signing of the Kyoto Protocol, and several laws passed in the wake of that signing).
Setting aside whether this asserted foreign policy can be pieced together from such a
miscellaneous patchwork, the Energy Companies have not shown how the alleged foreign
policy forms a necessary element of the Municipalities’ claims.
The Energy Companies also argue that the Municipalities’ nuisance claims
necessarily raise a collateral attack on the federal government’s “weighing of the costs
and benefits of fossil-fuel production and use” and upset the “appropriate balance”
regarding that delicate issue struck under federal administrative law. Appellants Br. at
30–31 (citing 42 U.S.C. § 13384, 43 C.F.R. § 3162.1(a), and Exec. Order No. 12,866
(1993)). This argument, however, also fails to show how these regulatory cost-benefit
determinations are an essential element of the Municipalities’ claims. As the district court
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reasoned, the Municipalities “do not allege that any federal regulation or decision is
unlawful, or a factor in their claims, nor are they asking the [c]ourt to consider whether
the government’s decisions to permit fossil fuel use and sale are appropriate.” App. at
221. Rather, any implied conflict between the Municipalities’ state-law claims and
federal cost-benefit determinations speaks to a potential defense on the merits of those
claims, specifically a preemption defense, rather than to the jurisdictional issue.
The Energy Companies argue the Municipalities “aim to achieve through state tort
law what they could not achieve in the federal legislative and regulatory process—
namely, a determination that [the Energy Companies’] activities are unreasonable.”
Appellants Br. at 31. But this is simply a description of our federalist system, not a reason
to override state sovereignty. That state common law might provide redress for harm
caused by certain private actors, and thereby create remedies unavailable to a plaintiff
through the federal legislative or regulatory process, is entirely unremarkable. Allowing
any mismatch in the priorities evinced through state and federal law to warrant removal,
in the absence of a substantial federal issue necessarily raised in the complaint, would
lead to a major diminution in the power of state courts to enforce their own laws. It would
also deny a tenet of dual sovereignty—that state courts “have inherent authority, and are
thus presumptively competent” to address federal issues, including federal defenses.
Tafflin v. Levitt, 493 U.S. 455, 458 (1990).9
9
“And, of course, the absence of original jurisdiction does not mean that there is
no federal forum in which a pre-emption defense may be heard. If the state courts reject a
claim of federal preemption, that decision may ultimately be reviewed on appeal by this
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The Municipalities assert state-law claims—for nuisance, trespass, unjust
enrichment, civil conspiracy, and violation of Colorado’s consumer protection law—
based on the Energy Companies’ knowing promotion and sale of fossil fuels at levels that
allegedly caused damage in Colorado. Far from the situation where the meaning of
federal law is “the only legal or factual issue contested,” Grable, 545 U.S. at 315
(emphasis added), here none of the issues the Municipalities raise pertain to the meaning
of these policy statements and federal regulations. The Municipalities can prevail on their
claims without proving any issue of federal law because the success of those claims is
grounded in traditional state-law causes of action and does not depend on any federal
policy or regulation. And the decision in this suit does not “depend[] upon the
determination of” any federal policy, order, or regulation that is “directly drawn in
question.” Smith, 255 U.S. at 201. If these federal issues are raised, it will be by the
Energy Companies as potential defenses, which cannot create a basis for removal. See
Becker, 770 F.3d at 947 (stating substantial question jurisdiction cannot depend solely on
a federal defense).
To be sure, there is a federal interest in promoting energy development. The
Energy Companies, however, have failed to establish that a federal issue is a necessary
element of the Municipalities’ state-law claims.
Court.” Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S.
1, 12 n.12 (1983).
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ii. Substantial
Even if the Energy Companies have identified a federal issue that is a necessary
element of the Municipalities’ claims, however, the Energy Companies would still have
to show that the federal issues are sufficiently substantial. The Supreme Court has applied
two tests to determine whether a federal issue is sufficiently substantial. As explained in
Grable and Gunn, courts should look to the importance of the issue to the federal system
to determine whether it is substantial. Gunn, 568 U.S. at 260; Grable, 545 U.S. at 310.
The Supreme Court suggested in Merrell Dow that courts should also consider whether
the relevant federal law provides a private right of action or preempts state causes of
action. See 478 U.S. at 812.10 We consider each substantiality test in turn, ultimately
concluding the Energy Companies have failed to establish the federal issues are
sufficiently substantial under either test.
1) Grable/Gunn substantiality
To satisfy Grable’s “substantial” prong, “it is not enough that the federal issue be
significant to the particular parties in the immediate suit.” Gunn, 568 U.S. at 260. “The
substantiality inquiry under Grable looks instead to the importance of the issue to the
10
The Energy Companies cite a three-part test from Nicodemus v. Union Pacific Corp.,
440 F.3d 1227, 1236 (10th Cir. 2006), for when “[a] case should be dismissed for want of
a substantial federal question.” Appellants Br. at 32; Reply Br. at 15. We have since
recognized that the “sweeping language” in Nicodemus “regarding substantiality . . . may
no longer be good law” after the Supreme Court’s decision in Empire Healthchoice
Assurance, Inc. v. McVeigh, 547 U.S. 677, 690, 700 (2006). Gilmore v. Weatherford, 694
F.3d 1160, 1175 n.3 (10th Cir. 2012). As such, we do not apply the test in Nicodemus and
instead rely on the substantiality tests applied by the Supreme Court.
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federal system as a whole.” Id.; see Grable, 545 U.S. at 310 (holding “that the national
interest in providing a federal forum for federal tax litigation is sufficiently substantial to
support the exercise of federal-question jurisdiction.” (emphasis added)). Such
importance to the system can be evaluated by assessing whether the federal issue “would
be controlling in numerous other cases.” McVeigh, 547 U.S. at 700. For example,
“Grable presented a nearly ‘pure issue of law,’ one ‘that could be settled once and for all
and thereafter would govern numerous . . . cases.” Id. (quoting R. Fallon, et al., HART &
WECHSLER’S THE FEDERAL COURTS AND THE FEDERAL SYSTEM 65 (2005 Supp.)). In
contrast, resolution of claims that are “fact-bound and situation-specific” would not have
this precedential effect and would be insufficiently substantial. Id. at 701.
The important national interest test is not satisfied here. A prerequisite to establish
a case as having importance “to the federal system as a whole” is to identify a concrete
federal law or regulation that the case definitively implicates, which the Energy
Companies have neglected to do. Gunn, 568 U.S. at 260. The Energy Companies broadly
argue that this state suit “sits at the intersection of federal energy and environmental
regulation and necessarily implicates foreign policy and national security.” Appellants
Br. at 32. But it is difficult to comprehend how the suit’s resolution could have
controlling effect across the federal system regarding any of these substantial issues when
the Energy Companies fail to adequately tether their “national interest” argument to any
specific federal law or laws.
It follows from this fundamental failure that this case, unlike Grable, does not
present “a nearly ‘pure issue of [federal] law’” for definitive resolution, McVeigh, 547
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U.S. at 700, (quoting R. Fallon et al., HART AND WECHSLER’S THE FEDERAL COURTS
AND THE FEDERAL SYSTEM 65 (2005 Supp.)), or “a context-free inquiry into the meaning
of a federal law,” Bennett, 484 F.3d at 910. To the contrary, the resolution of the
Municipalities’ state-law claims promises to be “fact-bound”—because it is dependent on
analyzing the fossil-fuel activities of the Energy Companies over a period of decades—
and “situation-specific”—because it is dependent on establishing the damage to natural
environment and property in Colorado due to climate change. McVeigh, 547 U.S. at 701.
To the extent federal issues may be injected into the proceedings, it is nevertheless likely
that state issues will still predominate because the Municipalities have pleaded only
state-law claims. See Bennett, 484 F.3d at 910. Regardless, the injection of those federal
issues would at most require “a fact-specific application of rules that come from both
federal and state law.” Id. Such a case fails the important national interest test for
substantiality.
2) Merrell Dow substantiality
A federal issue may also be substantial when the relevant federal law provides a
private right of action or preempts state remedies. Grable, 545 U.S. at 316 (citing Merrell
Dow, 478 U.S. at 812). Merrell Dow’s analysis of § 1331 substantiality in the context of a
state court tort suit is pertinent here.
In Merrell Dow, the plaintiffs sued a drug manufacturer in state court, alleging that
use of Bendectin during pregnancy led to birth deformities. 478 U.S. at 805. Five of the
six claims were common-law tort claims, and one claim alleged misbranding in violation
of the Food, Drug, and Cosmetic Act (“FDCA”). Id. at 805–06. The complaint also
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alleged that the defendant’s promotion of the relevant drug violated the FDCA,
amounting to a rebuttable presumption of negligence, and that the defendant’s FDCA
violations directly and proximately caused the injuries. Id. at 806. The defendant
removed the case based on this injection of federal law into the complaint, and the Sixth
Circuit upheld jurisdiction.
The Supreme Court reversed. It reasoned the FDCA provided no federal private
cause of action and the plaintiffs’ tort cause of action was “a subject traditionally
relegated to state law.” Id. at 810–11. “Given the significance of the assumed
congressional determination to preclude federal private remedies, the presence of the
federal issue as an element of the state tort is not the kind of adjudication for which
jurisdiction would serve congressional purposes and the federal system.” Id. at 814. The
Court further explained that Congress’s decision not to include a federal remedy for a
violation of the FDCA “is tantamount to a congressional conclusion that the presence of a
claimed violation of the statute as an element of a state cause of action is insufficiently
‘substantial’ to confer federal-question jurisdiction.” Id.The Court rejected the defendant’s argument “that there is a powerful federal
interest in seeing that the federal statute is given uniform interpretations, and that federal
review is the best way of insuring such uniformity.” Id. at 815. “To the extent that
petitioner is arguing that state use and interpretation of the FDCA pose a threat to the
order and stability of the FDCA regime,” the Court determined that a preemption
defense, not an attempted removal under § 1331, was the defendant’s proper recourse. Id.
at 816. And it also rejected the argument that “whether a particular claim arises under
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federal law depends on the novelty of the federal issue.” Id. at 817. It determined that this
would lead to inconsistencies across the federal courts. Id.
The Merrell Dow opinion also included an important footnote that attempted to
reconcile the seemingly conflicting holdings on § 1331 substantial question removal in
Smith, 255 U.S. 180, and Moore v. Chesapeake & Ohio Railway Co., 291 U.S. 205(1934). Id. at 814 n.12. The Court saw the difference in results “as manifestations of the
differences in the nature of the federal issues at stake.” Id. In Smith, where the Court
found federal jurisdiction, “the issue was the constitutionality of an important federal
statute.” Id. Conversely, in Moore, where the Court did not find federal jurisdiction, “the
Court emphasized that the violation of the federal standard as an element of state tort
recovery did not fundamentally change the state tort nature of the action.” Id.The Grable Court clarified that Merrell Dow did not create a bright-line rule
prohibiting substantial-question jurisdiction from being premised on a federal statute that
contained no private right of action. 545 U.S. at 317–18. Grable explained the import of
Merrell Dow’s reasoning:
The absence of any federal cause of action affected Merrell Dow’s result
two ways. The Court saw the fact as worth some consideration in the
assessment of substantiality. But its primary importance emerged when the
Court treated the combination of no federal cause of action and no
preemption of state remedies for misbranding as an important clue to
Congress’s conception of the scope of jurisdiction to be exercised under
§ 1331. The Court saw the missing cause of action not as a missing federal
door key, always required, but as a missing welcome mat, required in the
circumstances, when exercising federal jurisdiction over a state
misbranding action would have attracted a horde of original filings and
removal cases raising other state claims with embedded federal issues.
Id. at 318.
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Here, none of the sources of federal law upon which the Energy Companies
premise their attempted substantial-question removal contain a private cause of action,
and none would be likely to preempt any of the Municipalities’ state-law claims.11
Absence of a congressionally crafted remedy, or of a single federal statute, regulation, or
other law that speaks directly to the alleged important federal issues, reveals the absence
of the “welcome mat” required for a federal court to confidently accept jurisdiction over
these state-law tort claims. Id.
This case also falls within Merrell Dow’s conception of a federal interest not
critical enough to trigger substantial-question jurisdiction because, as in Moore, whatever
federal issues exist “d[o] not fundamentally change the state tort nature of the action.”
478 U.S. at 814 n.12; see Moore, 291 U.S. at 216–17 (reasoning that the presence of a
federal statute as an element of the state-law cause of action did not confer federal
jurisdiction, because “‘the right of the plaintiff to recover was left to be determined by the
law of the state’” (quoting Minneapolis, St. Paul & Sault Ste. Marie R. Co. v. Popplar,
237 U.S. 369, 372 (1915))). Finally, Merrell Dow rejects the argument that uniformity of
interpretation is a sufficient reason to demand a federal forum to protect the federal
interest when a preemption defense can be ably pursued in the state court action.
11
It is doubtful the federal provisions cited by the Energy Companies in their
cost-benefit argument would preempt state law. Both 42 U.S.C. § 13384 and Exec. Order
No. 12,866 impose only inter- and intra-branch directives, respectively. And 43 C.F.R.
§ 3162.1(a) simply requires federal oil and gas lessees to drill in a way that maximizes
economic recovery and minimizes waste. The same is true of the cited laws relating to the
Kyoto protocol. And the cited presidential statements and joint resolutions lack the power
to preempt.
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In summary, the standards set forth in Grable, Gunn, and Merrell Dow indicate
that the Energy Companies’ asserted federal interests are not substantial enough to
support federal jurisdiction. Because these federal interests are neither “necessarily
raised” nor sufficiently “substantial,” we affirm the district court’s rejection of this basis
for removal.
e. Federal enclave jurisdiction
State-law “actions which arise from incidents occurring in federal enclaves may be
removed to federal district court as a part of federal question jurisdiction.” Akin v.
Ashland Chem. Co., 156 F.3d 1030, 1034 (10th Cir. 1998). The Energy Companies
contend this doctrine allows for removal of the Municipalities’ claims because the
Amended Complaint alleges injuries within federal enclaves. Specifically, they point to
allegations of an insect infestation across Rocky Mountain National Park, an increased
flood risk to San Miguel River in Uncompahgre National Forest, and “heat waves,
wildfires, droughts, and floods” in both locations. Appellants Br. at 44 (quoting App. at
73, 80, 111, 116, 127). The district court held federal enclave jurisdiction does not
support removal because although injury may have occurred to those federal enclaves,
“[t]he actual injury for which [the Municipalities] seek compensation is injury to ‘their
property’ and ‘their residents,’ occurring ‘within their respective jurisdictions’” and not
within the federal enclaves. App. at 237 (quoting id. at 73, 75, 193). We agree.
As the Municipalities note, Uncompahgre National Forest is mentioned nowhere
in the Amended Complaint. And San Miguel River is not a federal enclave. The river
runs through southwest Colorado for approximately 81 miles. San-Miguel River,
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AMERICAN RIVERS, https://www.americanrivers.org/river/san-miguel-river/ (last visited
Jan. 1, 2022). The majority of that distance is outside Uncompahgre Forest’s borders. The
river crosses through the forest at only two brief junctures, each well under a mile. See
San Miguel River, GOOGLE MAPS,
http://www.google.com/maps/place/San+Miguel+River/ (last visited January 12, 2022).
An increased flood risk to the San Miguel River thus cannot credibly be deemed an injury
within a federal enclave.
It is true that the Amended Complaint references damage in Rocky Mountain
National Park, but it does so only in passing, and not as the site of any injury that might
trigger federal enclave jurisdiction. For example, the Amended Complaint alleges “more
severe insect outbreaks” across Colorado resulting from climate change, as evidenced in
part by a recent outbreak in Rocky Mountain National Park that “was the most severe
ever seen” in the state. App. 116. As the district court reasoned, the insect outbreak in the
national park is referenced only “to provide an example of the regional trends that have
resulted from [the Energy Companies’] climate alteration,” id. at 237, with the actual
alleged injury being “the bark beetle epidemics seen across Colorado,” id. 116 (emphasis
added).
The Energy Companies also argue the allegation that climate change will bring
“heat waves, wildfires, droughts, and floods to the State” is an allegation of injury to
Rocky Mountain and Uncompahgre because those enclaves exist within Colorado. Id. at
73. This theory sweeps far too broadly. The doctrine of federal enclave jurisdiction
generally requires “that all pertinent events t[ake] place on a federal enclave.” Rosseter v.
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Indus. Light & Magic, No. C 08-04545 WHA, 2009 WL 210452, at *1 (N.D. Cal. Jan.
27, 2009) (emphasis added); accord Mayor & City Council of Balt. v. BP, P.L.C.
(Baltimore I), 388 F. Supp. 3d 538, 565 (D. Md. 2019) (“[C]ourts have only found that
claims arise on federal enclaves, and thus fall within federal question jurisdiction, when
all or most of the pertinent events occurred there.” (collecting cases)). And even if we
were to credit the Energy Companies’ all-encompassing theory, the Municipalities
expressly disclaimed any “damages or abatement relief for injuries to or occurring on
federal lands.” App. 195. Rather, they sought relief for only the negative “impacts within
their respective jurisdictions.” Id. at 73.
“That the alleged climate alteration by [the Energy Companies] may have caused
similar injuries to federal property does not speak to the nature of [the Municipalities’]
alleged injuries,” which are all “alleged to have arisen exclusively on non-federal land.”
App. at 238. We agree with the district court that there is no viable claim of federal
enclave jurisdiction and affirm its rejection of removal based on that doctrine.
f. Outer Continental Shelf Lands Act
The Energy Companies assert federal jurisdiction exists under the OCSLA due to
Exxon’s decades-long OCS fossil-fuel operations pursuant to federal leases. The district
court denied this argument, holding that “[a] case cannot be removed under OCSLA
based on speculative impacts; immediate and physical impact is needed.” App. at 248.
Thus, the district court concluded, “[t]he fact that some of Exxon[]’s oil was apparently
sourced from the OCS does not create the required direct connection.” Id. at 246
(emphasis added). And it held the OCSLA was not grounds for federal jurisdiction.
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The OCSLA provides that federal courts “shall have jurisdiction of cases and
controversies arising out of, or in connection with . . . any operation conducted on the
[OCS] which involves exploration, development, or production of [OCS] minerals.” 43
U.S.C. § 1349(b)(1). To determine whether there is OCSLA jurisdiction, we consider
“whether (1) the activities that caused the injury constituted an ‘operation’ ‘conducted on
the [OCS]’ that involved the exploration and production of minerals, and (2) the case
‘arises out of, or in connection with’ the operation.” In re Deepwater Horizon, 745 F.3d
157, 163 (5th Cir. 2014) (quoting 43 U.S.C. § 1349(b)(1)). The second prong of that test
“require[s] only a but-for connection.” Id. (internal quotation marks omitted).
The dispute here focuses on this second prong: whether the case arises out of or in
connection with the OCS operation. Exxon argues this question should be answered in
the affirmative because the Municipalities’ claims “arise in part from [Exxon]’s
operations on the [OCS].” Appellants Br. at 47. In response, the Municipalities argue
OCSLA jurisdiction is founded on only “injuries arising directly out of physical activities
on the OCS or disputes directly involving OCS activities.” Appellee Br. at 52. We agree
with the Municipalities.
The § 1349(b) jurisdictional test is designed to cover a “‘wide range of activity
occurring beyond the territorial waters of the states,’” Barker v. Hercules Offshore, Inc.,
713 F.3d 208, 213 (5th Cir. 2013) (quoting Texaco Expl. & Prod., Inc. v. AmClyde
Engineered Prods. Co., 448 F.3d 760, 768 (5th Cir. 2006), amended on reh’g, 453 F.3d
652 (5th Cir. 2006)), and to encompass “the entire range of legal disputes that [Congress]
knew would arise relating to resource development on the [OCS],” Laredo Offshore
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Constructors, Inc. v. Hunt Oil Co., 754 F.2d 1223, 1228 (5th Cir. 1985). But while “[u]se
of the but-for test implies a broad jurisdictional grant under § 1349,” Tenn. Gas. Pipeline
v. Houston Cas. Ins. Co., 87 F.3d 150, 155 (5th Cir. 1996), its use “is not limitless”
because a “blind application of this test would result in federal court jurisdiction over all
state law claims even tangentially related to offshore oil production on the OCS,” Plains
Gas Sols., LLC v. Tenn. Gas Pipeline Co., 46 F. Supp. 3d 701, 704–05 (S.D. Tex. 2014).
The district court similarly reasoned that a strict application of the but-for test
would “dramatically expand the statute’s scope,” creating removal jurisdiction regarding
“[a]ny spillage of oil or gasoline involving some fraction of OCS-sourced-oil” or “any
commercial claim over such a[n OCS-sourced] commodity.” App. at 247–48. The court
concluded that § 1349 is not constructed so expansively in practice, and instead read
OCSLA as requiring a case to “arise directly out of OCS operations.” Id. at 245. Again,
we agree with the district court’s thoughtful analysis.
Indeed, caselaw bears out this interpretation. The decisions finding jurisdiction
under § 1349 all involve a significantly more direct connection between OCS operations
and the relevant lawsuit than that which exists here.12 They each feature either claims
12
See In re Deepwater Horizon, 745 F.3d 157, 161 (5th Cir. 2014) (removal
jurisdiction over action for oil-spill damages to wildlife stemming from catastrophic
blowout of OCS drilling rig); Barker v. Hercules Offshore, Inc., 713 F.3d 208, 211 (5th
Cir. 2013) (removal jurisdiction over claims stemming from accidental death of worker
“on a jack-up rig attached to the [OCS]”); Tenn. Gas Pipeline v. Houston Cas. Ins. Co.,
87 F.3d 150, 152 (5th Cir. 1996) (removal jurisdiction over claims stemming from a
vessel’s collision “with a platform secured to the [OCS]”); Amoco Prod. Co. v. Sea Robin
Pipeline Co., 844 F.2d 1202, 1203, 1209 n.23 (5th Cir. 1988) (removal jurisdiction over
dispute regarding take-or-pay obligations in contracts for the sale and purchase of natural
gas extracted from OCS wells); Ronquille v. Aminoil Inc., No. 14-164, 2014 WL
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with a direct physical connection to an OCS operation (collision, death, personal injury,
loss of wildlife, toxic exposure) or a contract or property dispute directly related to an
OCS operation. See, e.g., Barker, 713 F.3d at 213 (“By his own admission Barker’s
employment on the jack-up rig was directly related to the development of minerals or
other natural resources on the OCS.”); Amoco Prod. Co. v. Sea Robin Pipeline Co., 844
F.2d 1202, 1210 (5th Cir. 1988) (stating that the contract rights at issue “necessarily and
physically ha[d] an immediate bearing on the production of the particular [OCS oil]
well,” thus bringing the dispute within the “arising out of, or in connection with”
language (quoting 43 U.S.C. § 1349(b)(1))). Despite the seemingly broad “but-for” test,
courts “have made it clear that a dispute must have a sufficient nexus to an operation on
the OCS to fall within the jurisdictional reach of the OCSLA.” Fairfield Indus., Inc. v. EP
Energy E&P Co., L.P., No. H-12-2665, 2013 WL 12145968, at *4 (S.D. Tex. May 2,
2013) (collecting cases).
Here, there is not such a nexus between the dispute and Exxon’s OCS operations.
The Fifth Circuit has sanctioned OCSLA jurisdiction over disputes “one step removed
4387337, at *2 (E.D. La. Sept. 4, 2014) (removal jurisdiction over tort claims of plaintiff
whose asbestos exposure arose at least in part from provision of “direct support for Shell
Oil’s rigs,” including “the unloading and loading of barges, other boats, and trucks that
transported equipment and pipe from OCS platforms”); Oil Field Cases, 673 F. Supp. 2d
358, 370 (E.D. Pa. 2009) (removal jurisdiction over claims “based on injuries sustained
while working on oil rigs” that were attached to the OCS); see also EP Operating Ltd.
P’ship v. Placid Oil Co., 26 F.3d 563, 565 (5th Cir. 1994) (original jurisdiction over suit
filed to partition property located on the OCS); Laredo Offshore Constructors, Inc. v.
Hunt Oil Co., 754 F.2d 1223, 1225 (5th Cir. 1985) (original “jurisdiction over a contract
dispute involving the construction of a stationary offshore platform on the [OCS]”).
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from the actual transfer of minerals to shore” such as “a contractual dispute over the
control of an entity which operates a gas pipeline.” United Offshore Co. v. S. Deepwater
Pipeline Co., 899 F.2d 405, 407 (5th Cir. 1990). But the relationship between Exxon’s
OCS operations and the Municipalities’ claims is removed several steps beyond that. The
Municipalities largely challenge the Energy Companies’ sale and deceptive promotion of
fossil fuels, activities that have no direct connection to Exxon’s production of fossil fuels
on the OCS. See App. at 147–72. To be sure, the Energy Companies characterize the
Municipalities’ claims as “targeting defendants’ worldwide fossil-fuel business,” which it
contends “necessarily sweep in [Exxon’s OCS] operations.” Reply Br. at 25. Even under
the broader scope of its global operations, however, the extent to which Exxon’s OCS
activities contributed to the downstream injuries alleged by the Municipalities in
Colorado is too attenuated to sustain OCSLA removal jurisdiction where none of those
Colorado-sited injuries are alleged to arise directly from OCS operations or
OCS-extracted oil. As the district court noted, “jurisdiction under OCSLA makes little
sense for injuries in a landlocked state that are alleged to be caused by conduct that is not
specifically related to the OCS.” App. at 247. Indeed, we have found no prior citations to
43 U.S.C. § 1349(b)(1) in any opinion from the fully landlocked Tenth Circuit.
The decision in Parish of Plaquemines v. Total Petrochemical & Refining USA,
Inc., 64 F. Supp. 3d 872, 898 (E.D. La. 2014), supports this conclusion. While that case
dealt with the first prong of the Fifth Circuit’s § 1349(b) test, its analysis is nonetheless
pertinent here. In Total Petrochemical, a Louisiana parish sued various oil companies for
engaging in unpermitted local operations that damaged parish land and waterbodies. Id. at
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877–78. In seeking removal under § 1349(b), the defendants argued that “some of the
complained-of activity . . . pertains to pipelines that carry oil and gas from the OCS to the
[Parish], and that some of the facilities at issue in the [Parish] service oil and gas
development on the OCS and co-mingle production with offshore sources.” Id. at 894.
The defendants claimed jurisdiction was proper “because [the] action ‘involve[d]’
operations on the OCS, and it therefore ar[o]se[] in connection with OCS operations.” Id.
at 896. The court rejected this argument, holding that “the relationship between the
injuries in this case and the activities that cause[d] them and any operations on the OCS
[was] simply too remote and attenuated.” Id. at 898. Just as “the ‘mere connection’
between the claims asserted and an OCS operation [was] ‘too remote’ to establish federal
jurisdiction” in Total Petrochemical, id., it is likewise too remote to establish federal
jurisdiction here.
Even under the technical reading of the Fifth Circuit’s jurisdictional test advocated
by Exxon, there is no indication that Exxon’s OCS operations were a pure “but-for”
cause of the Municipalities’ claims. None of the Energy Companies offer any basis to
conclude that absent the OCS activities the injuries complained of would not have
occurred. Accordingly, the OCS activities are not the “but-for” cause of the
Municipalities’ injuries.
As the Baltimore I court reasoned, “[the d]efendants were not sued merely for
producing fossil fuel products, let alone for merely producing them on the OCS.” 388 F.
Supp. 3d at 566. “Rather, the City’s claims are based on a broad array of conduct,
including [the] defendants’ failure to warn consumers and the public of the known
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dangers associated with fossil fuel products, all of which occurred globally.” Id.
Consequently, the Municipalities’ Colorado-based injuries and attendant state-law claims
could have arisen even if whatever slice of Exxon’s fossil-fuel production attributable to
its operations on the OCS was removed from consideration. This failure to establish
“but-for” causation leaves the Energy Companies’ jurisdictional burden of proof
unsatisfied.
Finally, the Energy Companies argue that the statutory purpose of OCSLA’s
jurisdictional grant would be frustrated if this suit is not heard in federal court because an
award of the billions of dollars in damages sought by the Municipalities “would
substantially discourage production on the [OCS] and would jeopardize the future
viability of the federal [OCS] leasing program.” Appellants Br. at 47–48. But it is
difficult to see how such a prospective theory of negative economic incentives—flowing
from a lawsuit that does not directly attack OCS exploration, resource development, or
leases—is anything other than contingent and speculative. And, as the district court
noted, “[a] case cannot be removed under OCSLA based on speculative impacts;
immediate and physical impact is needed.” App. at 248; cf. Texas v. United States, 523
U.S. 296, 300 (1998) (“A claim is not ripe for adjudication if it rests upon ‘contingent
future events that may not occur as anticipated, or indeed may not occur at all.’” (quoting
Thomas v. Union Carbide Agricultural Prods. Co., 473 U.S. 568, 580–81 (1985))).
The defendants in Total Petrochemical made a similar policy argument,
contending that the imposition of state court liability based on injuries to the land and
waterbodies of a Louisiana parish would “have a significant adverse impact on oil and
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gas production on the OCS because the OCS and onshore oil and gas systems do not
operate independently but rather extensively overlap and share infrastructure.” 64 F.
Supp. 3d at 894. The district court found that the state court lawsuit could negatively
impact the defendants’ OCS operations but held that such impact was too speculative to
support jurisdiction. Id. at 897–98. The same logic applies here. The chain of
contingencies that connects the initiation of this case in state court to an eventual
“impair[ment of] the total recovery of the federally[] owned materials from the” OCS is
too uncertain, speculative, and hypothetical to serve as a jurisdictional hook. Amoco
Prod., 844 F.2d at 1210. Thus, we affirm the district court’s rejection of OCSLA’s
jurisdictional provision as a basis for federal subject-matter jurisdiction over the
Municipalities’ claims.
CONCLUSION
For the reasons explained, we hold that none of the six grounds the Energy
Companies assert for removal on appeal are sufficient to establish federal jurisdiction
over the Municipalities’ state-law claims. We therefore AFFIRM the district court’s order
remanding the action to the state court.
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